Israeli startups and venture capital industry
The number of Israeli unicorns has soared in the past few years, from one in 2013 to 18 in 2019, and then to 65 in May 2021. In 2019, the number of new creative independent beasts with a valuation of more than 1 billion U.S. dollars has almost doubled to 20, making it the fourth-largest new creative power country in the world in terms of number of independent beasts, only behind to the United States, China, and United Kingdom, the number of people and markets in these countries are multiples of Israel. Twenty unicorns are already more than the number of unicorns in France, Germany and Australia combined.
New data shows that in the past decade, the average time it takes for Israeli technology companies to become so-called unicorns (or companies worth more than $1 billion) has halved. According to a report by Catalyst Investments, it takes an average of 6 years for Israeli companies established after 2008 to reach a valuation of US$1 billion, while it takes 15 years for Israeli unicorns established between 1999 and 2008.
In 2016, the amount of venture capital absorbed by Israel’s high-tech industry reached US$4.8 billion, which was 11% higher than the previous year. Between 2010 and 2018, the total investment of world companies in Israel reached 18.4 billion U.S. dollars, and the annual investment increased by 400%. According to Start-Up’s announcement, as of August this year, it has attracted 15.1 billion US dollars in new funds, which will be 10.7 billion US dollars in 2020.
US and China in Israel
U.S. dominates Israeli startups
Alphabet (ticker:s: GOOGL and GOOG), Microsoft (ticker: MSFT), and Intel (ticker: INTC) are the most active in investing in Israel; especially Intel set up factories in Israel shortly after the company was established.
Alphabet once fell in love with Israeli web application developer LabPixies, and later included navigation application software company Waze under its command; Samsung (ticker: SSNLF) also acquired Israeli set-top box manufacturer Boxee.
From 2005 to 2014, an average of about 86 Israeli companies were acquired by giants each year. Even savvy investors like Buffett, Berkshire (ticker:s: BRK.A and BRK.B) have acquired Israeli companies a long time ago. He bought the first company outside of the United States in his life-the metal company ISCAR.
Israel’s cyber security technology can be said to be the world’s best. At the end of the last century, when the Internet became popular, Check Point (ticker: CHKP), the most famous cyber security protection company, was a listed company that was dual-listed in Tel Aviv and Nasdaq. The world’s first instant messaging software ICQ was developed by Mirabilis (Viber was developed in Israel as well), which was born in Israel in 1996. Without ICQ, there would be no MSN, WeChat, Line, Kakao, Telegram.
According to Israeli Foreign Ministry officials, about one-third of investment funds in high-tech industries come from China and Hong Kong, and the amount of Chinese investment has grown by 50% a year. Israeli Prime Minister Natanyahu also visited China and met with 11 leaders of large Chinese companies to promote Israeli technology content and seek capital investment. It is said that during the visit, 25 Israeli companies have signed agreements with China worth up to 2 billion U.S. dollars.
The main areas of cooperation include health, agriculture, water technology, and investment in Israeli funds. Alibaba (ticker: BABA) invested USD 5 million in Israeli QR Code technology platform Visualead, Baidu (ticker: BIDU) invested USD 3 million in imaging technology company Pixellot, and Lenovo invested USD 10 million in venture capital funds Canaan Partners Israel.
The Chinese automaker SAIC has set up an autonomous driving technology research and development center in Israel. China values the automobile industry’s shift to environmentally friendly transportation and smart car technology. It has been listed as a five-year plan, and automakers are looking for high-tech in Israel.
When the two countries established diplomatic relations, the trade volume between Israel and China was only 50 million U.S. dollars, and now it has exceeded 11 billion U.S. dollars. China is the world’s largest market and Israel’s third largest trading partner.
Intel is the most active
One of the three founders of Intel, and the most famous and longest-standing CEO in Intel history, Andy Grove, is a Jew. He is extremely passionate about investing in Israel, but the achievements returned by the Israeli branch have not disappointed Intel.
In 1972, Intel’s Israeli engineer Dov Frohman developed a revolutionary EPROM that can be erased multiple times. This achievement had a fierce head-on conflict between him and Intel’s CEO at the time, and he was striving to obtain it based on reason (Intel encouraged this culture at the time and listed it as a basic corporate code).
This EPROM chip directly opened the door to information processing technology. Five years later, the Israeli led the team and developed the 8088 microprocessor. For a long period of time in the future, basically, the microprocessors that Intel launched every year were developed by the US headquarters or the Israeli branch.
Perhaps friends who are not in the semiconductor industry do not know that EPROM chips and 8088 microprocessors have a key influence on the subsequent development of the chip industry.
In 2017, Intel spent US$15.3 billion to acquire Mobileye, the top self-driving startup, which was the largest acquisition in Intel’s history. In 2016, Intel also spent US$175 million to win the Israeli VR technology company Replay.
Biotech is also extremely developed
One of the more famous is TEVA, a very famous company that I mentioned in section 2-3 in the book “The Rules of Super Growth Stocks Investing”. And Japan’s Mitsubishi acquired the Israeli pharmaceutical company NeuroDerm for US$885 million.
Other leading technologies
Israel’s R&D investment accounts for the highest proportion of GDP in the world. In the fields of genetics, computer science, security, wireless communication, chemistry and other fields, as many as 10 Israelis and people of Israeli descent have won the Nobel Prize.
In addition to high technology, Israel’s agricultural technology, water purification, and seawater desalination technology are unique in the world.
Two-thirds of Israel is covered by deserts. In order to solve the problem of water resources, 31 desalination plants and more than 200 water treatment companies have been built locally, and the technology has been exported abroad, and more than 400 desalination plants have been built all over the world. The factory earns more than US$1 billion in foreign exchange a year.
The drip irrigation technology invented by the Israelis turned the vast desert where grass is difficult to grow into an oasis. Israel has created a high-tech agricultural miracle. Not only is the local area rich in fruits and cheese, its agricultural products export value is nearly 1.5 billion US dollars a year, and even more surprising is that Israel is also the world’s second largest flower supplier after the Netherlands. Diamond Israel is actually the world’s most important diamond processing center. The output value of diamond exports in one year is second only to technology products.
The following is an overview of the development of new innovative technologies in some important countries in my blog, or brief articles:
- “Venture capital and unicorns introduction“
- “Global Venture Capital and Unicorn Report“
- “Let’s talk about TikTok “
- “Failed Taiwan Software Industry Policy“
- “The hardware and software gap between China and US, is all China-made software and hardware possible?“
- “Japan is already a country of mediocrity, not as advanced as you think“
- “South Korea’s emerging technology giant“
- “Beyond your imagination of Israel’s strong venture capital and tech strength“
- “Reasons of the success Israel’s technology nation“
- “Israel stock market and tech giants“
- “Booming India stock market and the emerging Indian tech giants“
- “Indians do well in the US, India’s weak and uncompetitive industries
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